Carmen v. Health Carousel, LLC

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

NOVIE DALE CARMEN, et al.,

Plaintiffs,

Case No. 1:20-cv-313

v. JUDGE DOUGLAS R. COLE

HEALTH CAROUSEL, LLC,

Defendant.

OPINION AND ORDER

This cause comes before the Court on Defendant Health Carousel, LLC’s

(Health Carousel) Motion to Dismiss (Doc. 44) Plaintiffs Novie Dale Carmen, Jerlin

C. Amistoso, and Kersteen B. Flores’ Third Amended Complaint (Doc. 43). Health

Carousel also moves to Strike Plaintiffs’ Class Allegations (Doc. 45) and to Stay

Discovery (Doc. 47). For the reasons discussed below, the Court DENIES Health

Carousel’s Motion to Dismiss (Doc. 44) and DENIES Health Carousel’s Motion to

Strike Class Allegations (Doc. 45). Finally, the Court DENIES Health Carousel’s

Motion to Stay (Doc. 47) AS MOOT.

BACKGROUND

This is a putative class action. Novie Dale Carmen, Jerlin C. Amistoso, and

Kersteen B. Flores bring this case on behalf of similarly situated immigrants that

Health Carousel currently or previously employed. (3d Am. Compl., Doc. 43, #986).

And this is not Defendant’s first Motion to Dismiss in this case. On June 17, 2021,

the Court issued an Opinion denying Health Carousel’s combined Motion to Dismiss

Carmen’s (first) Amended Complaint and Motion to Strike Class Allegations (Doc.

21). Later, Carmen amended her Complaint two more times, resulting in the now-

operative Third Amended Complaint, filed on December 17, 2021. (Doc. 43).

The Third Amended Complaint removed some previously alleged facts, while

also adding new allegations, two new plaintiffs (Amistoso and Flores), and five new

causes of action. (See id.). In response, Health Carousel has now moved to dismiss

the Third Amended Complaint, to strike class allegations, and to stay discovery while

the Court considered these Motions. (Docs. 44, 45, 47).

The Court has already extensively detailed the general facts in its previous

Opinion and Order. (Doc. 21, #598–608). Yet that was two years ago. So the Court

will repeat those common allegations that appear in both the Amended Complaint

and the Third Amended Complaint, before turning to note the differences.1

Health Carousel is a recruiting and staffing company

headquartered in Hamilton County, Ohio, that enlists foreign nurses,

primarily from the Philippines, to work in healthcare facilities across

the United States. The healthcare facilities that employ the nurses pay

Health Carousel an amount in excess of the nurse’s hourly wages.

Health Carousel then pays the nurses the wages to which they are

entitled, keeping the difference for itself. As the description suggests,

the amount of return that Health Carousel generates for a given nurse

depends on how many hours that nurse works through the auspices of

the Health Carousel program.

The nurses receive several benefits from Health Carousel in

exchange for their participation in the arrangement. Beyond the obvious

benefit of placing the nurses in a job, Health Carousel also sponsors the

nurses’ permanent U.S. resident visa petitions; pays related expenses,

including examination, filing, and attorney’s fees; pays airfare to the

1 For purposes of Health Carousel’s Motion to Dismiss, the Court assumes true all factual

allegations stated in the Third Amended Complaint. Therefore, the Court presents these

allegations as fact for now, but without prejudice to Health Carousel challenging them in

future filings.

United States; provides free temporary housing in the United States;

pays cash bonuses when participating nurses arrive in the United

States; and provides medical benefits and life insurance.

Those benefits last, however, only while the nurse is employed

through Health Carousel. So, for example, if a nurse is residing in

Health Carousel-supplied housing, that nurse must leave such housing

within 48-hours after her last shift as a Health Carousel employee.

Health Carousel calls its business model the “Passport USA” program.

Each nurse executes two agreements as part of this business

arrangement. The first is a form contract, the “Employment Contract,”

which each foreign nurse signs to initiate her employment relationship

with Health Carousel. As this agreement is executed before Health

Carousel begins the visa process, nurses will almost always sign this

contract while still abroad.

As relevant to this case, the Employment Contract includes four

provisions that set forth a participating nurse’s obligations. First, the

contract contains a “Commitment Period” provision. This term requires

the participating nurse to work “for a period of time commencing upon

the completion of [the nurse’s] orientation … and becoming fully licensed

and ending upon the later of (i) 36 months or (ii) 6,240 regular-time work

hours.” In other words, the period starts upon the later of orientation or

licensure, and then continues for at least three years of 52-week-per-

year, forty-hour work weeks (i.e., 3 x 52 x 40 = 6,240). Moreover, any

hours of overtime do not count toward the 6,240-hour target. And, if a

nurse takes any vacation, of course, that time off likewise will not accrue

any hours in regard to the contractually-specified Commitment Period.

Second, each Employment Contract contains an “Exclusivity”

provision. Here, a participating nurse acknowledges that Health

Carousel will invest “a significant amount of time, effort, and money”

into the participating nurse’s licensing and visa processing. Based on

that, the nurse agrees not to seek sponsorship or accept any employment

in the United States from another company, without Health Carousel’s

written consent, before that nurse has fulfilled his or her obligations

under the Employment Contract.

Third and relatedly, each Employment Contract contains a non-

compete and non-solicitation clause. This term prohibits a nurse from

“seek[ing] employment … with any other healthcare provider within 50

miles of [the nurse’s] Client facilities for one year after [the date the

nurse leaves Health Carousel if the nurse violated the terms of the

Employment Contract].” A nurse who left Health Carousel before the

end of the Commitment Period, for example, would trigger this non-

compete obligation.

Fourth and finally, each of Health Carousel’s Employment

Contracts contains a “Breach Obligation” provision. This clause states

that, in the event of a given nurse’s breach, “[the nurse] agree[s] that

damages sustained by Health Carousel … are impossible, or at least

very difficult, to estimate accurately and, for that reason, [the nurse]

agree[s] that the [liquidated damages] amount is a reasonable forecast

of fair compensation for any such breach.” The Employment Contract

does not specify a dollar figure for the liquidated damages, but rather

sets forth a list of expenses and potential lost profit items that both

parties agree will be used to determine the liquidated damages amount

in a given case. And rather than provide a precise computation, the term

merely states, if the nurse breaches the Employment Contract, the

nurse “shall pay the liquidated damages to be agreed upon and shall be

settled amicably by the parties without prejudice of filing the case in the

proper court.”

But the Employment Contract at issue here also includes an

Addendum that further amends the Breach Obligation provision.

Through the Addendum, the parties agree to a range of specifically

identified liquidated damages figures. The applicable figure in each case

depends on when the breach occurs in relation to the progress on the

nurse’s visa application. More specifically, the liquidated damages are

set at: $1,000 if the breach occurs before Health Carousel filed for the

visa; $10,000 if the breach occurs after filing but before issuance of the

visa; and finally, $20,000 if the breach occurs after the issuance of the

visa but before the end of the “Commitment Period.”). The Complaint

further alleges that Health Carousel amended the Addendum over time

to increase the liquidated damages figures for nurses who were recruited

later—for example, raising the top amount from $20,000 to $35,000.

Upon arrival in the United States, a nurse receives and signs various

agreements that, together, form a 183-page “Employee Handbook.”

(Employee Handbook). The Handbook mostly consists of Health

Carousel’s workplace policies and employee benefits information. Some

of these policies simply notify Health Carousel employees of standard

safety practices, like how to react in the case of a fire or how to safely

transport a patient. Other policies provide rules that govern the nurse’s

workplace behaviors. For example, the Handbook prevents nurses from

discussing the terms and conditions of their employment and prohibits

“gossip” at work. Still other policies further describe the relationship

between Health Carousel and the nurses. The Handbook, for instance,

explains that “[a]s long as [a nurse] remain[s] in good standing with

Health Carousel, we will continue to be [that nurse’s] advocate for

immigration purposes.”

The Handbook also revises some provisions in a nurse’s earlier

Employment Contract. Two of those revisions are relevant to Health

Carousel’s Motion. First, while the Employment Contract provides that

a nurse’s “Commitment Period” does not begin until the nurse obtains

full licensure, the Handbook explains that “[s]ecuring and maintaining

[a] licensure or certification is each [nurse’s] responsibility.” Second, the

Handbook tweaks the Breach Obligation provision from the

Employment Contract. The Handbook does not alter the liquidated

damages figures, but it does use different language when describing

other consequences that flow from a breach. Specifically, while the

Employment Contract provides that the liquidated damages shall be

“settled amicably,” the Handbook drops that language and states only

that any liquidated damages amount will be “due immediately and in

full on or before the last day” of the nurse’s employment. Further, the

Handbook indicates that Health Carousel will file suit and seek

damages from any nurse who breaches the Employment Contract and

fails to pay liquidated damages. The Handbook then warns nurses that

if they “leave the country, Health Carousel can still obtain a judgment

that will be enforceable abroad.”

B. Health Carousel Employs Carmen.

Carmen is a citizen of the Republic of the Philippines. She worked

there as an emergency-room nurse from approximately 2014 to 2018.

“Lured” by the opportunity to come to the United States, in late-2014,

Carmen contacted Health Carousel about its Passport USA programs. A

few months later, on April 6, 2015, Carmen and Health Carousel

executed an Employment Contract. Under the terms of that Contract,

Carmen joined Health Carousel’s Global Express Program.

In her Employment Contract, Carmen agreed to the (1) non-

compete agreement; (2) Breach Obligation provision; and (3)

Commitment Period. The Addendum in her agreement specified that

Carmen would owe $20,000 in liquidated damages if “[e]arly

termination occurs after the issuance of [her] visa but prior to

completing [her] Commitment Period.”

After Carmen executed her Employment Contract, nearly three

years passed before she received the visa that she needed to enter the

United States. Carmen arrived in this country on January 17, 2018. The

day after her arrival, Health Carousel presented Carmen with the

Handbook, and required her to sign it at the time that she received it.

Carmen alleges that many of the terms in the Handbook “surprised” her,

including, for example, the Handbook’s threat to litigate if Carmen

breached the agreement. In any event, Carmen signed the Handbook

and began working at The University of Pittsburgh Medical Center

(“UPMC”) in Muncy, Pennsylvania, less than a month later, i.e., the

second week of February 2018. Carmen officially became a Health

Carousel employee on her first day of work with UPMC Muncy.

When Carmen began at UPMC, she had not yet obtained her

permanent nursing license from Pennsylvania, but instead was working

under a temporary license. … Given that the Commitment Period

provision in her Employment Contract only began to run when Carmen

was fully licensed, Carmen’s work before August 2018 did not count

against her Commitment Period, although it did benefit Health

Carousel.

C. Carmen Leaves Health Carousel.

Not long after Carmen began working for Health Carousel, she

learned that her colleagues who were working directly for UMPC (i.e.,

not through Health Carousel) were earning more than her. Her salary,

among other factors, led Carmen to conclude that she wished to

terminate her employment with Health Carousel.

Carmen claims that the terms in Health Carousel’s contracts,

however, forced her to continue working. Her first, and apparently most

pressing, concern was that Health Carousel would sue her for $20,000

in liquidated damages under the Breach Obligation provision of her

Employment Contract if she left her position before the expiration of the

Commitment Period. Second, Carmen alleges that she felt forced to

continue working for Health Carousel because the non-compete in her

Employment Contract limited her employment options.

Finally, Carmen claims that she hesitated to terminate her

employment because the Handbook “implies” that any nurse who leaves

before the end of the Commitment Period will suffer adverse

immigration consequences. The relevant section of the Handbook states

“[a]s long as you remain in good standing with Health Carousel, we will

continue to be your advocate for immigration purposes.” Carmen

reasons that the opposite is also true: that if she leaves early, Health

Carousel will try to send her back to the Philippines.

Despite her claimed fears, Carmen terminated her employment

with Health Carousel in November 2019. At the time she quit, Carmen

had worked for Heath Carousel for 22 months—i.e., since February

2018. As Carmen did not gain her full license until August 2018, only

about sixteen of those months counted toward Carmen’s three-year

Commitment Period. When Carmen left, she borrowed $20,000 from her

boyfriend to pay Health Carousel the liquidated damages for her early

termination due under both the Employment Contract and the

Handbook. Carmen alleges that she has experienced hardship, stress,

anxiety, guilt, and depression as a result of having to borrow this money

from her boyfriend. At some point after paying Health Carousel, Carmen

moved to Hershey, Pennsylvania, where she found a nursing job that

pays more than her old position at Health Carousel.

(Doc. 21, #598–608 (citations omitted)).

Carmen includes the same principal allegations in her Third Amended

Complaint, but with a few key differences. First, Carmen once alleged that Health

Carousel “slow-rolled” or otherwise interfered with her obtaining her license so it

could extract more labor from her. (Id. at #605–06). Carmen has now dropped that

allegation. (Compare Am. Compl., Doc. 11, #139–40, with Doc. 43). Second, Carmen

now alleges that Health Carousel falsely reported in visa applications to the United

States Citizenship and Immigration Services (USCIS) that Health Carousel would

pay workers the prevailing wage after arrival. (Doc. 43, #1016–17). Third, Carmen

alleges that in those same applications Health Carousel falsely reported that

Plaintiffs had “full-time, permanent employment” awaiting them, despite knowing

their work depended on matching immigrants with companies. (Id.). Fourth, Carmen

provided additional facts relating to her claim that Health Carousel paid her beneath

the prevailing wage—alleging Health Carousel paid her just $25.50 per hour, while

her domestic-born coworkers received “almost $29 per hour.” (Id. at #1007).

The Third Amended Complaint also added two additional named Plaintiffs—

Amistoso and Flores. (Id. at #985). Similar to Carmen, both immigrated to the United

States through Health Carousel’s program, and both believe Health Carousel illegally

exploited them. (Id. at #988, 991–1020). In addition, both signed initial contracts in

the Philippines, and Health Carousel subjected both to a Commitment Period and a

liquidated damages penalty if they did not complete their obligations. (Id.). And both

claim Health Carousel isolated them, demanding they not discuss their contract with

others. (Id. at #1004–05).

Beyond these similarities, Amistoso and Flores also had their differences.

Amistoso, a native of the Philippines, worked for Health Carousel as a physical

therapist in the Denver, Colorado region. (Id. at #1003). After arriving in the United

States, Health Carousel had her undergo a three-month unpaid orientation, despite

allegedly leading her to believe it would last two weeks. (Id. at #996). Moreover,

despite working during this orientation, Amistoso’s labor did not count toward her

Commitment Period. (Id.). As with Carmen, Health Carousel had Amistoso sign the

New Employee Binder upon arrival, which contained new terms absent from the

Philippines contract. (Id. at #994). Yet unlike Carmen, Health Carousel paid

Amistoso not by the hour but by patient visit. (Id. at #1009). Her alleged pay disparity

is more striking—she claims to have been paid $45.56 per visit, while her domestic-

born coworkers earned anywhere from $75 to $105 per visit. (Id. at 1008–09).

Amistoso also claimed she had more experience than her counterparts, yet Health

Carousel paid her less because “she went to school in the Philippines and not in the

United States.” (Id. at #1009).

Health Carousel assigned Amistoso a mandatory 30-visit weekly target, all in-

person and spread over a large geographic region. She claims she at times drove over

100 miles per day to administer care but did not receive compensation for her travel.

(Id. at #1009). Then, when she got home, Amistoso allegedly worked into the night to

finish paperwork from the day’s visits, also receiving no compensation for this work.

(Id.). Amistoso also claims she received no respite from her weekly visit goal. (Id.).

For holidays and personal time, she simply had to make up her missed visits

elsewhere.

According to Amistoso, this arrangement contradicted representations Health

Carousel had made in the Philippines while recruiting her. (Id.). And when she later

talked with Health Carousel personnel in this country about her concerns, they

allegedly suggested that “if she was not still working for Health Carousel, she could

not remain in the United States.” (Id. at #1007).

Then in January 2020, the facility employing Amistoso downsized, ending her

contract. (Id. at #1013). Health Carousel allegedly informed Amistoso that she would

have to wait, without pay, until Health Carousel could find a new employer, and that

her new job would likely require Amistoso to move outside Colorado. (Id. at #1013–

14). With a new baby, Amistoso balked at moving, but Health Carousel insisted her

only other alternative would be coughing up the $20,000 liquidated damages. (Id.).

And Health Carousel provided Amistoso an accounting of its expected damages to

justify the $20,000 demand, which included about $8,000 in “back office

administrative support fees.” (Id.).

Ultimately, Amistoso refused to move and breached her contract. (Id. at

#1014). But she did not have money to pay the liquidated damages. (Id.). Worried,

Amistoso contacted Legal Aid, who sent a letter to Health Carousel contesting the

liquidated damages provision’s legality. (Id. at #1014–15). Since then, Health

Carousel has allegedly not contacted Amistoso about the damages, and it appears

Amistoso has not paid. (Id. at #1015).

Flores, a Registered Nurse, faced her own difficulties. (Id. at #992). Unlike

Carmen and Amistoso, the Third Amended Complaint does not explicitly allege

Flores received or signed the New Employee Binder upon arrival. (See id. at #994–

95). But it does claim she “was subject to substantially the same rules upon her

arrival” and “was also surprised by Health Carousel’s policies and practices.” (Id.).

Health Carousel placed Flores with the West Virginia University Health System, and

she underwent her unpaid orientation from November 12 through January 6. (Id. at

#996). Flores claims her orientation period ended January 6, yet Health Carousel

“objected and insisted Flores’s time be classified as orientation time for an additional

six days.” (Id.).

After orientation, Flores began working long hours, only to realize that her

overtime did not count toward her commitment period. (Id. at #1010). Flores also

worried because Health Carousel had assigned her work she felt untrained to handle.

(Id. at #1011). When she complained, Health Carousel ignored her. (Id.). Flores then

discussed breaching her contract with Health Carousel, and staff members allegedly

“suggested to [her] that if she terminated her contract without paying the breach fee,

she would have immigration-related problems.” (Id. at #1007).

In September 2021, the facility employing Flores restructured, ending her

contract. (Id. at #1015). Health Carousel told Flores she would receive daily “ad hoc”

assignments with the West Virginia Health Care Systems. (Id.). Flores protested,

believing she did not have the training to “provide care in the variety of units they

attempted to place her.” (Id.). But Health Carousel persisted. (Id.). Flores became

despondent, taking off “three days of accrued personal time off.” (Id.). After that,

Health Carousel ended her contract and demanded $30,000 in liquidated damages

immediately. (Id.). Flores, not having the money, offered $10,000 as full satisfaction.

(Id.). Health Carousel accepted the money, but still demanded the additional $20,000.

(Id.). The $20,000 remains outstanding. (Id.).

Collectively, Carmen, Amistoso, and Flores bring ten claims in their Third

Amended Complaint. These are: (1) Violations of the Trafficking Victims Protection

Act (TVPA) under 18 U.S.C. § 1589(a); (2) Violation of the TVPA under 18 U.S.C.

§ 1589(b); (3) Violation of the TVPA under 18 U.S.C. § 1590(a); (4) Violation of the

TVPA under 18 U.S.C. § 1594(a); (5) Violation of Racketeer Influenced and Corrupt

Organizations (RICO) Act under 18 U.S.C. § 1962 predicated on Fraud in Foreign

Labor Contracting under 18 U.S.C. § 1351; (6) Violations of the RICO Act predicated

on Visa Fraud under 18 U.S.C. § 1546; (7) Violations of the RICO Act predicated on

Trafficking under 18 U.S.C. § 1590; (8) Violation of Ohio Corrupt Practices Act

(OCPA) under Ohio Rev. Code § 2923.32; (9) Violations as to Carmen of the Fair Labor

Standards Act (FLSA) under 29 U.S.C. § 201 et seq.; (10) Violation of Ohio’s Human

Trafficking Law under Ohio Rev. Code § 2905.32. (Id. at #1026–37). Carmen had pled

five in her Amended Complaint—only the RICO, OCPA, and FLSA claims appear for

the first time.

On January 3, 2022, Health Carousel moved under Rule 12(b)(6) to dismiss the

Third Amended Complaint. (Doc. 44). Health Carousel also moved to strike class

allegations from the Third Amended Complaint, arguing Plaintiffs’ allegations were

not suited to class treatment. (See Doc. 45). Finally, three days later, Health Carousel

moved to stay discovery while the Court considered these motions. (Doc. 47). All three

are now ripe.

STANDARD OF REVIEW

Plaintiffs press ten claims, and Health Carousel moves to dismiss all ten for

“failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). In

resolving that motion, the Court must “construe the complaint in the light most

favorable to the plaintiff, accept its allegations as true, and draw all reasonable

inferences in favor of the plaintiff.” Bassett v. Nat’l Collegiate Athletic Ass’n, 528 F.3d

426, 430 (6th Cir. 2008) (internal quotation marks omitted).

That is so, however, only as to well-pled factual allegations. The Court need

not accept “‘naked assertions’ devoid of ‘further factual enhancement.’” Ashcroft v.

Iqbal, 556 U.S. 662, 678 (2009) (brackets omitted) (citing Bell Atl. Corp. v. Twombly,

550 U.S. 544, 557 (2007)). Rather, there must be “sufficient factual matter, accepted

as true, to ‘state a claim to relief that is plausible on its face.’” Id. (quoting Twombly,

550 U.S. at 570).

DISCUSSION

The Court has already addressed the sufficiency of five of the ten claims in a

previous Opinion denying a motion to dismiss. Although the Third Amended

Complaint presents some different allegations, they do not change the outcome as to

those claims. As for the new claims, the Court finds Plaintiffs have plausibly alleged

each cause of action. Separately, the Court denies Health Carousel’s Motion to Strike

Class Allegations. And because the Court denies both these Motions, it also denies

Health Carousel’s Motion to Stay Discovery as moot.

A. Plaintiffs Again Plausibly Allege Trafficking Victims Protection Act

Claims.

Let’s start with how we got here. When first examining Carmen’s Amended

Complaint (before Amistoso and Flores joined the suit), the Court found that she had

plausibly alleged her four TVPA counts. (Doc. 21, #621). After finding Carmen’s TVPA

claims came down to whether she suffered the threat of a “serious harm,” the Court

set about defining how such harm could be shown. (Id. at #611). The Court noted that

an employment contract, even if voluntarily entered, can at times result in illegally

compelled labor. (Id. at #612–13). The Court highlighted that no one clause or term

is dispositive but that a court should “consider all the surrounding circumstances” to

determine whether the total effect is coercive. (Id. at #615). The Court further

recognized that a “bait-and-switch” tactic could create coercive effects, where a party

is misled about the terms in a way that compels their labor. (Id. at #615–16). Then,

the Court summarized:

In short, it is not the existence or non-existence of an employment

contract that controls. Rather, the key questions relate to the

substantive terms of the alleged contract (e.g., are they too one-sided?),

as well as the parties’ conduct in the formation and performance of the

agreement. Indeed, in some ways, it is not unlike the contractual

unconscionability framework, which also has both a substantive and

procedural component.

(Id. at #617).

Applying that framework, the Court found Carmen’s Amended Complaint had

plausibly alleged that she had suffered a risk of serious harm that compelled her

labor. And the Court highlighted two bait-and-switch allegations. First, that Health

Carousel impeded Carmen’s ability to obtain her full license, in turn extending her

Commitment Period. (Id. at #618). Second, that Health Carousel compelled her to

work extensive overtime without counting those hours towards her Commitment

Period. (Id.). Separately, the Court found that Carmen pled sufficient “allegations of

substantive egregiousness” through the liquidated damages “penalty.” (Id. at #619).

Fast forward to today. Now in the Third Amended Complaint, the Court

concludes that Plaintiffs Carmen, Amistoso, and Flores have plausibly alleged their

TVPA claims. They provide sufficient allegations that Health Carousel created a

threat of “serious harm” to compel their labor. Many of the same allegations from the

Amended Complaint remain, including allegations that Health Carousel forced the

Plaintiffs to work excessive overtime and that Health Carousel used liquidated

damages as a “penalty” to lock Plaintiffs in. (Doc. 43, #995, 998).

True, Carmen no longer alleges Health Carousel stalled her full licensure.

Even without Plaintiffs’ “stalling” allegation, though, Plaintiffs have still plausibly

alleged a threat of serious harm. As the Court held previously, assessing a serious

harm requires a holistic analysis. And looking at the surrounding circumstances here,

the Court finds it plausible, based on the allegations in the now-operative Complaint,

that Health Carousel subjected Plaintiffs to a threat of serious harm though its

liquidated damages provision and working conditions.

This case in many ways mirrors Paguirigan v. Prompt Nursing Agency Emp.

Agency LLC, No. 17-cv-1302, 2019 WL 4647648 (E.D.N.Y. Sept. 24, 2019). There, the

healthcare staffing company defendant contracted to pay the immigrant plaintiffs the

prevailing wage upon their arrival. Id. at *2. Yet after arrival, the defendant failed

to pay the prevailing wage, and threatened plaintiffs with a $25,000 liquidated

damage penalty to ensure they continued to work. Id. at *18. On a motion for

summary judgment, the Paguirigan court found the $25,000 liquidated damages

“provision constitutes a threat of sufficiently serious financial harm.” Id. Here too,

Plaintiffs allege Health Carousel seeks to compel Plaintiffs’ labor through the

liquidated damages penalty.

In response, Health Carousel asks the Court to apply the Rule of Lenity. (Doc.

44, #1075). Health Carousel argues no prior caselaw gave it notice that its

employment contracts violated the TVPA. (Id. at #1075–76). And as statutory

language must have the same meaning in both criminal and civil contexts, Health

Carousel says, the Court must hold that the statute cannot be applied in this “new”

context, even civilly. (Id. at #1076). The company summarizes, “[i]f there is any doubt

whether liquidated damages could cause ‘serious harm’ under the TVPA, … the Court

should apply the rule of lenity.” (Id. at #1076).

The Rule of Lenity reflects the notion that “due process bars courts from

applying a novel construction of a criminal statute to conduct that neither the statute

nor any prior judicial decision has fairly disclosed to be within its scope.” United

States v. Lanier, 520 U.S. 259, 266 (1997). Yet the Rule of Lenity is triggered only

when “after considering text, structure, history, and purpose, there remains a

‘grievous ambiguity or uncertainty in the statute.’” Barber v. Thomas, 560 U.S. 474,

488 (2010) (quoting Muscarello v. United States, 524 U.S. 125, 139 (1998)).

Health Carousel, on the other hand, fashions its own conception of the Rule.

In the company’s view, the Rule demands that Plaintiffs identify an exact case match

that put Health Carousel on notice—almost akin to the “clearly established” principle

from qualified immunity. But that is not and never has been the law. The Rule is not

triggered simply through a novel application of a criminal statute. After all, every

statute has to be invoked for a first time. Rather, the Rule comes into play when a

novel application implicates an unacceptable vagueness latent within the statute

itself. Before invoking the Rule of Lenity, then, Health Carousel must first grapple

with the TVPA’s text and context. It did not.

Accordingly, the Court finds, again, that Plaintiffs have plausibly alleged

sufficient facts to support their four claims under the TVPA. Again, that is not to

suggest that Plaintiffs will succeed on those claims. But that is not the question now.

B. Plaintiffs Again Plausibly Allege An Ohio Human Trafficking Statute

Claim.

In its previous Opinion, the Court explained that Ohio’s Human Trafficking

statute “expressly contemplates that ‘fraud,’ which leads to ‘compelled ... labor,’ could

establish a claim” and found that standard plausibly met. (Doc. 21, #622–23). But

there, the Court focused on Carmen’s claim that Health Carousel stalled her

licensure. (Id.). Now, the Third Amended Complaint has dropped that allegation.

Still, the Court finds the Third Amended Complaint plausibly alleges Health

Carousel used fraud to compel Plaintiffs’ labor, although based on different

allegations. Plaintiffs says that Health Carousel, while recruiting them to come to

the United States, misled them about working conditions, pay rates, work

expectations, hours, and overall length of service. (Doc. 43, #995–96, 1008, 1010–11).

For example, Plaintiffs say they did not know Health Carousel would make them

work overtime. Yet after arrival, Plaintiffs say they felt compelled to work overtime,

for fear of otherwise being assessed the liquidated damages “penalty.” (Id. at #986).

And if Health Carousel in fact made material misrepresentations to Plaintiffs about

their contractual obligation to work overtime or other material aspects of their

employment, that may suffice to show the company violated Ohio’s human trafficking

statute.

Health Carousel otherwise only responds with recycled arguments the Court

has already considered and rejected in its prior Opinion. Thus, the Court finds

Plaintiffs have plausibly stated a claim under the Ohio Human Trafficking statute.

C. Plaintiffs Plausibly Allege RICO Claims.

Now for Third Amended Complaint’s novel claims, starting with Plaintiffs’

three RICO claims. A civil RICO plaintiff starts with four core elements they must

show as to the defendant: “(1) conduct (2) of an enterprise (3) through a pattern (4) of

racketeering activity.” Moon v. Harrison Piping Supply, 465 F.3d 719, 723 (6th Cir.

2006) (quoting Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985)); 18 U.S.C.

§ 1962(c). As part of that, a plaintiff must also show “(1) two or more predicate

racketeering offenses, (2) the existence of an enterprise affecting interstate

commerce, (3) a connection between the racketeering offenses and the enterprise, and

(4) injury by reason of the above.” Grow Michigan, LLC v. LT Lender, LLC, 50 F.4th

587, 594 (6th Cir. 2022). Covered predicate acts are listed in 18 U.S.C. § 1961(1), and

include the three predicate acts on which Plaintiffs rely here: Fraud in Foreign Labor

Contracting (18 U.S.C. § 1351); Visa Fraud (18 U.S.C. § 1546); and Trafficking (18

U.S.C. § 1590). (Doc. 43, #1029–35). “[T]he term ‘enterprise’ denotes any legal entity,

such as a corporation, or ‘any union or group of individuals associated in fact although

not a legal entity.’” Grow Michigan, 50 F.4th at 594 (citing 18 U.S.C. § 1961(4)).

The RICO statute sweeps broadly so courts construe it liberally. Sedima, 473

U.S. at 497–98. But its scope is not unlimited. Jackson v. Sedgwick Claims Mgmt.

Servs., Inc., 731 F.3d 556, 568 (6th Cir. 2013). For example, RICO only allows

recovery for commercial-based injuries to “business or property.” 18 U.S.C. § 1964(c);

see also Jackson, 731 F.3d at 562. Finally, a plaintiff must show but-for and proximate

cause between the predicate act and their injury. Hemi Grp., LLC v. City of New York,

559 U.S. 1, 9 (2010).

Plaintiffs say that Health Carousel (and its affiliates) carry out a business plan

that routinely violates multiple federal criminal statutes. (Doc. 43, #1029–35). Off the

bat, it appears to the Court—and no party disputes—that Health Carousel is an

enterprise operating in interstate commerce. Instead, the parties mainly contest

whether Plaintiffs plausibly allege the following three elements: (1) that Health

Carousel committed the requisite predicate acts; (2) that Plaintiffs suffered a RICO

injury; and (3) that Health Carousel proximately caused said RICO injury.

Ultimately, the Court agrees that Plaintiffs plausibly allege each of these elements.

1. Plaintiffs Plausibly Allege Health Carousel Committed

Predicate Acts.

Plaintiffs’ RICO predicates can be grouped into two categories: fraud-based

and trafficking-based. Start with the two fraud-based predicate acts: Fraud in

Foreign Labor Contracting under 18 U.S.C. § 1351 and Visa Fraud under 18 U.S.C.

§ 1546. The two statutes prohibit largely the same conduct, but differ in the person

to whom the defendant directs the misrepresentations. Fraud in Foreign Labor

Contracting focuses on alleged misrepresentations to the foreign worker:

(a) Work Inside the United States.--Whoever knowingly and with intent

to defraud recruits, solicits, or hires a person outside the United States

or causes another person to recruit, solicit, or hire a person outside the

United States, or attempts to do so, for purposes of employment in the

United States by means of materially false or fraudulent pretenses,

representations or promises regarding that employment shall be fined

under this title or imprisoned for not more than 5 years, or both.

18 U.S.C. § 1351. Visa Fraud, on the other hand, covers, in part, situations where the

defendant misrepresents material facts on immigration forms submitted to the

government. 18 U.S.C. §1546.

Plaintiffs have plausibly alleged Health Carousel committed both. Plaintiffs

contend that Health Carousel misrepresented its intent to pay Plaintiffs the

prevailing wage upon their arrival in this country, and that it made this

representation both to the Plaintiffs and to immigration officials. As to the former,

Plaintiffs claim Health Carousel told them, before they signed on, to expect to be paid

the prevailing wage. (Doc. 43, #1029–30). Indeed, their contracts state: “Health

Carousel will pay you an hourly wage rate in accordance with United States

Department of Labor prevailing wage guidelines and the premium rate provided by

state or federal law for all authorized and properly documented overtime worked for

the Client facility(ies).”2 (Doc. 1-2, #36). And, as to the latter, Plaintiffs say Health

Carousel made a similar guarantee in their Form I-140 applications for Plaintiffs’

visas to the USCIS. (Doc. 43, #1032–34).

But, according to Plaintiffs, Health Carousel never intended to pay Plaintiffs

the prevailing wage upon arrival in the United States, and Plaintiffs’ pay in fact fell

well below the wages their peers earned.3 (Id. at #1007–10, 1016–17). And while the

Court applies the heightened fraud pleading standard of Rule 9(b) to these fraud

2 Plaintiffs attached a contract to their initial Complaint. Health Carousel has never

contested the accuracy of the contract. Although Plaintiffs did not re-attach the contract to

the Third Amended Complaint, there seems little justification to disregard the contract

simply because it was not needlessly re-submitted.

3 Health Carousel argues that Carmen has not alleged “Health Carousel paid her less than

the hourly rate promised in her Employment Contract.” (Doc. 44, #1059). But the

Employment Contract states that Carmen will be paid the prevailing wage, and Plaintiffs do

indeed contend that they received below prevailing wage. (Doc. 43, #1007). Of course, the

Court for now takes no position on whether Plaintiffs’ compensation actually fell below the

prevailing wage.

predicates, see Wall v. Mich. Rental, 852 F.3d 492, 496 (6th Cir. 2017), Plaintiffs have

met that standard here. They present the actual contractual terms containing the

alleged misrepresentations.4 Indeed, Plaintiffs appear to say the contract terms and

visa applications themselves contained fraud because Health Carousel had no

intention to follow through on them. This specificity puts Health Carousel on notice

of its alleged fraud.5 See U.S. ex rel. SNAPP, Inc. v. Ford Motor Co., 532 F.3d 496, 504

(6th Cir. 2008) (recognizing the “overarching purpose [of Rule 9(b)] is to ensure that

a defendant possesses sufficient information to respond to an allegation of fraud”).

Moving on, Plaintiffs have also plausibly alleged Health Carousel committed

Trafficking. That statute criminalizes:

Whoever knowingly recruits, harbors, transports, provides, or obtains

by any means, any person for labor or services in violation of this chapter

shall be fined under this title or imprisoned not more than 20 years, or

both.

4 To state a fraud claim with particularly under Rule 9(b), “a plaintiff, at a minimum, to

‘allege the time, place, and content of the alleged misrepresentation on which he or she relied;

the fraudulent scheme; the fraudulent intent of the defendants; and the injury resulting from

the fraud.’” Coffey v. Foamex L.P., 2 F.3d 157, 161–62 (6th Cir. 1993) (quoting Ballan v.

Upjohn Co., 814 F. Supp. 1375, 1385 (W.D. Mich. 1992)).

5 Granted, this means Plaintiffs must be able to hold Health Carousel liable for fraudulent

representations made within contractual terms. In the common law fraud context, courts are

divided as to whether a misrepresentation within a contract can give rise to a fraud cause of

action. Compare NewSpin Sports, LLC v. Arrow Elecs., Inc., 910 F.3d 293, 308–09 (7th Cir.

2018) (“The general rule in New York is that ‘a fraud cause of action ... does not arise where

the alleged fraud merely relates to a breach of contract.’”), with Sofka v. Thal, 662 S.W.2d

502, 507 (Mo. 1983) (en banc) (noting that under Missouri law, a “promise accompanied by a

present intent not to perform is ... sufficient to constitute actionable fraud” (emphasis

omitted)). Yet Fraud in Foreign Labor Contracting makes no direct reference as to whether

the “materially false or fraudulent pretenses, representations, or promises” can be made in

the terms of a contract itself. See 18 U.S.C. § 1351. But analogizing the common law, the

Court concludes that fraud arises if contractual promises are made with “a present intent not

to perform.” See Sofka, 662 S.W.2d at 507.

18 U.S.C. § 1590. Notably, “in violation of this chapter” includes the TVPA allegations

described above. As Health Carousel plausibly violated Plaintiffs’ rights under the

TVPA, Plaintiffs have adequately pled the predicate act of Trafficking. (Doc. 43,

#1035).

2. Plaintiffs Plausibly Allege RICO Injuries.

As noted, only injuries to business or property constitute a RICO injury. 18

U.S.C. § 1962(c). Injuries, even monetary injuries, that “‘aris[e] directly out of’ a

personal injury” fall outside RICO’s scope. Jackson, 731 F.3d at 565. Rather,

“[p]laintiffs must allege a ‘proprietary type of damage’ to establish a RICO claim.” Id.

at 569. This can include “lost wages,” but only if they arise from such a “proprietary”

(non-personal injury) harm. Id.

Plaintiffs have, at minimum, alleged a RICO injury from Health Carousel

denying them their contractual right to a prevailing wage. In the Employment

Contracts, Health Carousel bound itself to pay Plaintiffs the prevailing wage. (Doc.

1-2, #36). And Plaintiffs claim their pay fell below that level—violating the

Employment Contracts. (See, e.g., Doc. 43, #1007). That plausibly alleges a RICO

injury. See Jackson, 731 F.3d at 569.

Health Carousel responds in two ways. First, it protests that Plaintiffs cannot

claim an injury in an unknown wage differential. (Doc. 44, #1085–86). Health

Carousel also says wage differences, like those here, are a common part of life and so

cannot be a RICO injury. (Id.). Neither argument works. To start, Health Carousel

agreed to pay Plaintiffs “in accordance with United States Department of Labor

prevailing wage guidelines.” (Doc. 1-2, #36). The Department of Labor, in turn,

defines “prevailing wage” as “the average wage paid to similarly employed workers

in a specific occupation in the area of intended employment.”6 If Health Carousel

failed to meet that standard, as alleged, then any damages presumably can be

calculated by reference to that definition. True, Plaintiffs may (or may not) need

expert testimony to establish exactly what that is, depending on the nature of the

proof otherwise available. But the need for expert testimony does not render those

damages too speculative for recovery. And Plaintiffs are not “just” underpaid workers.

Taking Plaintiffs’ allegations and the reasonable inferences that follow from them at

face value, Health Carousel violated provisions of its contract with the Plaintiffs—

provisions meant to induce them to uproot their lives and travel halfway around the

world.

3. Plaintiffs Plausibly Allege Health Carousel Caused Their RICO

Injuries.

Lastly, RICO plaintiffs must show the predicate act was both a but-for and

proximate cause of their injuries, with “some direct relation between the injury

asserted and the injurious conduct alleged.” Hemi Grp., 559 U.S. at 9. Stemming from

§ 1964(c)’s “by reason of” language, proximate cause exists where “the defendant’s

racketeering offense ‘led directly to the plaintiff’s injuries.’” Grow Michigan, 50 F.4th

at 594 (quoting Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 461 (2006)). Merely

foreseeing that the injury may occur is not enough. Id. Similarly, “derivative or

6 See Prevailing Wage Information and Resources, U.S. Dep’t of Labor (last visited August 8,

2023), https://www.dol.gov/agencies/eta/foreign-labor/wages.

passed-on” indirect injuries cannot meet the proximate cause threshold. Id. at 595.

Rather, courts generally require the most “immediate victims of an alleged RICO

violation” to bring claims where they have an incentive to sue. Id. at 596 (quoting

Anza, 547 U.S. at 460)); Hemi Grp., 559 U.S. at 11–12. Such a requirement helps

avoid the “risk of duplicative injuries,” as well as the danger of extending the RICO

statute beyond its appropriate context. Grow Michigan, 50 F.4th at 594 (quoting

Anza, 547 U.S. at 459)). Courts generally decline “to go beyond the first step” in

determining causation. Hemi Grp., 559 U.S. at 10.

Plaintiffs say, among other things, that Health Carousel intentionally refused

to compensate them at the prevailing wage. Plaintiffs also allege that Health

Carousel furthered its scheme through the multiple predicate acts discussed. To

Plaintiffs, Health Carousel defrauded the Plaintiffs by lying about its intention to pay

them the prevailing wage, defrauded the USCIS by lying about the same, and

transported Plaintiffs into the country to have them work for less than the prevailing

wage. (Doc. 43, #986, 1007, 1035). Finally, they contend they “are the best situated to

bring suit based on Health Carousel’s racketeering” and in the “best position to ‘to

gather information about [Health Carousel’s] conduct.’” (Id. (quoting Alix v. McKinsey

& Co., 23 F.4th 196, 208 (2d Cir. 2022)).

Plaintiffs have plausibly alleged that Health Carousel’s predicate acts

proximately caused their RICO injury. First, Health Carousel (again allegedly)

committed each predicate act as essential steps furthering its scheme to underpay

Plaintiffs and generate profit for itself. Put another way, Health Carousel’s Fraud in

Foreign Labor Contracting persuaded Plaintiffs to immigrate, its Visa Fraud got

them into the country, and its Trafficking delivered them to the site where the alleged

exploitation occurred. Plaintiffs are also the most natural RICO plaintiffs to recover

on their prevailing wage injury. As parties to the Employment Contract, they are the

most “immediate victims,” making them best suited to recover for any violation of

those contracts. See Grow Michigan, 50 F.4th at 595. Finally, Health Carousel has

little danger of duplicative judgments. Although Health Carousel potentially could

have exposure to criminal liability based on the predicate acts (if they in fact

occurred), no other victims besides Plaintiffs and the putative class appear likely to

recover financially in RICO. See id.

In fact, this case in some ways resembles Bridge v. Phoenix Bond & Indem. Co.

553 U.S. 639 (2008). In Bridge, the Supreme Court examined a RICO claim where a

contractor defrauded a county government by improperly submitting multiple bids

for the right to buy tax liens. Id. at 642–43. A losing bidder sued the contractor under

RICO, predicating its claim on the mail fraud against the county. Id. The Court

ultimately held the competitor’s RICO claim could proceed because first-person

reliance is not an element of mail fraud, although it can help to show proximate

causation. Id. at 648–49. In so doing, the Court recognized the flexible concept of

proximate cause did not always require first-person reliance, and that a RICO claim

may proceed even where the predicate act was directed toward a governmental third

party. Id. at 659. Here too, Plaintiffs’ Visa Fraud allegation can further their RICO

claim even though Health Carousel allegedly defrauded the United States. As Bridge

recognized, Plaintiffs need not show they personally relied on the Visa Fraud to show

proximate cause, so long as the USCIS relied.

Health Carousel resists this outcome, pointing to decisions from the Fourth

and Fifth Circuit: Molina-Aranda v. Black Magic Enters. LLC, 983 F.3d 779 (5th Cir.

2020), and Walters v. McMahen, 684 F.3d 435 (4th Cir. 2012). In both, the defendants

allegedly lied to immigration officials about immigrant workers’ anticipated pay upon

arrival in the country. Molina-Aranda, 983 F.3d at 784–85; Walters, 684 F.3d at 444.

Those courts held that fraudulent statements to immigration officials did not

proximately cause the eventual harm to the immigrants after arrival. Molina-

Aranda, 983 F.3d at 784–85; Walters, 684 F.3d at 444. The Molina-Aranda court, for

example, relying heavily on Walters, stated that “[p]laintiffs’ allegations … do not

support a conclusion that their underpayment injuries were directly caused by the …

alleged fraud in obtaining the H-2B visas. Rather, their complaint shows that the

injury was caused by the alleged underpayments which were not required by the

alleged fraud.” 983 F.3d at 784–85.

The Court is not convinced. Walters involved a very different set of facts.

There, the plaintiffs were local workers at the same facility at which the foreign

workers were employed. 684 F.3d at 437–38. They claimed that the employer’s failure

to pay the foreign workers in accordance with the promises it made in the H-2B

paperwork had a carry-over impact of depressing wages for the local workers, as well.

Id. at 438. That extra step between the fraud (relating to one set or workers) and the

pay (for a different set of workers) makes causation more attenuated then here. So

Walters can be distinguished.

True, the facts of Molina-Aranda appear far closer to the facts Plaintiffs allege

in this matter. There as here, the Molina-Aranda plaintiffs were the immigrant

workers themselves. 983 F.3d at 784–85. But in this Court’s view, the Molina-Aranda

court adopted too narrow a reading of RICO’s flexible causation standard. After all,

RICO penalizes illicit schemes, furthered through predicate acts. And as the Supreme

Court clarified in Bridges, the RICO plaintiff need not be the target of the predicate

act to recover. Thus, visa fraud on immigration officials, committed as part of a

scheme to import and underpay immigrant laborers, strikes the Court as causally

linked with the injury those laborers suffer when they immigrate and are underpaid.

Beyond that, even taking Molina-Aranda and Walters at face value, those cases

concerned fraudulent statements made to immigration officials. Thus, they have little

bearing on whether Plaintiffs meet proximate cause as to their RICO claims

predicated on Fraud in Foreign Labor Contracting and Trafficking.

D. Plaintiffs Plausibly Allege An Ohio Corrupt Practices Act Claim.

The Ohio Corrupt Practices Act states:

No person employed by, or associated with, any enterprise shall conduct

or participate in, directly or indirectly, the affairs of the enterprise

through a pattern of corrupt activity or the collection of an unlawful

debt.

Ohio Rev. Code § 2923.32(A)(1). The statute is modeled after the federal RICO

statute. Portnoy v. Nat’l Credit Sys., Inc., 837 F. App’x 364, 372 (6th Cir. 2020). Thus,

much like in the federal context, “a plaintiff must show the following: (1) the ‘conduct

of the defendant involves the commission of two or more specifically prohibited state

or federal criminal offenses;’ (2) ‘the prohibited criminal conduct of the defendant

constitutes a pattern;’ and (3) the ‘defendant has participated in the affairs of an

enterprise or has acquired and maintained an interest in or control of an enterprise.’”

Id. (quoting Morrow v. Reminger & Reminger Co., L.P.A., 915 N.E. 2d 696, 708 (Ohio

Ct. App. 2009). Moreover, the predicate crimes must “be related and pose a threat of

continued criminal activity.” Morrow, 915 N.E. 2d at 708. And here as well, a plaintiff

must show the defendant’s illicit conduct was a but-for and proximate cause of their

injury. Bradley v. Miller, 96 F. Supp. 3d 753, 774 (S.D. Ohio 2015).

Drawing on the analysis above, the Court finds that Plaintiffs have plausibly

stated a claim under the OCPA. Plaintiffs have alleged Health Carousel operated an

enterprise through illegal conduct designed to import and exploit underpaid foreign

labor. (Doc. 43, #1035–36). Plaintiffs claim they have been harmed by, among other

things, “reduced wages”—beneath what Health Carousel contractually agreed to.

(Id.). And as discussed above, Health Carousel’s alleged predicate acts proximately

and directly caused this injury. (Id.).

Health Carousel responds that Plaintiffs failed to cite the specific provision of

the OCPA they intend to proceed under, and that Plaintiffs have failed to adequately

allege Health Carousel engaged in any criminal activity. (Doc. 44, #1094–95). Not so.

Plaintiffs’ Third Amended Complaint makes clear which provision they proceed

under by using the language of the statute: “Defendant’s multiple and repeated

commissions of various felonies … form a pattern of corrupt activities through which

Defendant conducted or participated in the affairs of the enterprise in violation of

OCPA.” (Doc. 43, #1035–36). This suffices for notice pleading. And the Court has

already determined that Plaintiffs have adequately alleged Health Carousel

committed criminal activity to further its enterprise. Therefore, Plaintiffs’ OCPA

claim has been plausibly alleged and may proceed.

E. Carmen Plausibly Alleges A Fair Labor Standards Act Claim.

Under the FLSA, an employer must compensate an employee with at least the

minimum wage. 29 U.S.C. § 206(a). To be considered “paid,” wages must be “paid

finally and unconditionally or ‘free and clear.’” 29 C.F.R. § 531.35. Wages will not be

“free and clear” where an employer directly or indirectly deducts “kick-backs”

intended for the employer’s benefit. Id.; Stein v. HHGREGG, Inc., 873 F.3d 523, 531

(6th Cir. 2017); Parker v. Battle Creek Pizza, Inc., 600 F. Supp. 3d 809, 812 (W.D.

Mich. 2022) (“[E]mployers cannot shift business expenses to their employees if doing

so drops the employees’ wages below minimum wage.”). And likewise, an employer

may not demand illegal kickbacks even after a paycheck is delivered. See Stein, 873

F.3d at 531.

Examples of potentially illegal deductions or demands include costs to acquire

the tools of trade for the employer’s business, safety implements for workers,

electricity used for commercial purposes, taxes and insurance on commercial

buildings, and employer-required uniforms. 29 C.F.R. § 531.3, 531.32. On the other

hand, an employer may lawfully deduct or demand reimbursement of expenses for

items that primarily benefit the employee, like employee meals from a company

restaurant, employee housing, and some commuter transportation. See id. § 531.32.

Accordingly, where the employer demands liquidated damages for an employee’s

breach of an employment contract, courts assess how those damages are calculated

to determine whether they constitute permissible or illicit recoveries. See, e.g.,

Gordon v. City of Oakland, 627 F.3d 1092, 1095–96 (9th Cir. 2010) (not counting

contractual damages as a kickback because the damages recuperated employee

training expenses); Heder v. City of Two Rivers, 295 F.3d 777, 779 (7th Cir. 2002)

(same).

The parties disagree about whether the relocation costs from the Philippines

to the United States count as expenses incurred for the employer’s benefit or for the

employee’s benefit. Courts disagree too. Compare Arriaga v. Fla. Pac. Farms, LLC,

305 F.3d 1228, 1248 (11th Cir. 2002), with Castellanos-Contreras v. Decatur Hotels,

LLC, 601 F.3d 621, 400–01 (5th Cir. 2010). Contributing to the confusion, the U.S.

Department of Labor appears to have changed its view on this issue over the past

decades in the context of temporary work visa laborers. Compare 73 Fed. Reg. at

78041, with 75 Fed. Reg. at 6915, and Rivera v. Peri & Sons Farms, Inc., 735 F.3d

892, 898–99 (9th Cir. 2013). Of course, Plaintiffs became permanent residents, not

temporary workers, so that may matter, as well. In any event, the Court finds that it

unnecessary to wade into that debate at this time.

That is because Carmen alleges she worked 51 hours her final week and

received $1,300 as a result. Upon terminating her employment, Health Carousel

demanded, and Carmen paid, $20,000 in liquidated damages. So the narrow question

before the Court (for now) appears to be whether any portion of the $20,000 liquidated

damages was intended to recoup expenses incurred for Health Carousel’s benefit.

(Doc. 44, #1095–96).

Health Carousel says no, claiming its liquidated damages merely recoup

expenses it incurred for the immigrant employees’ benefit, “including visa fees,

attorney’s fees, airfare, an ‘arrival bonus,’ and temporary housing while the

professional locates her permanent housing.” (Doc. 44, #1053). Yet when demanding

liquidated damages from Amistoso, Health Carousel provided a line-item justification

for the $20,000 figure —including $8,000 for “back office administrative support fees.”

(Doc. 43, #1014). And although Amistoso never paid, Carmen did. In effect, Carmen

seeks to incorporate this break-down of expenses, suggesting that $8,000 of the

$20,000 she paid compensated Health Carousel for its internal operating costs.

For pleading, that is enough. Carmen has plausibly alleged that $8,000 of her

liquidated damages covered Health Carousel’s own operating expenses. And as

Carmen only received $1,300 her final week, an $8,000 kickback would reduce her

net pay below zero. Of course, she will still need to prove that this same breakdown

applies to her. And separately, Health Carousel may eventually show, with additional

facts, that the company properly demanded “administrative support fees”—i.e., that

these fees derived from services for Carmen’s benefit, not Health Carousel’s. But at

least for now, Carmen has nudged this claim into the realm of plausibility.

F. The Court Denies Health Carousel’s Motion to Strike Class

Allegations.

As noted, Health Carousel previously moved to strike class allegations. (Doc.

12). The Court denied that Motion in its prior Opinion. (Doc. 21, #624–30). Now,

Health Carousel again moves to strike class allegations from the Third Amended

Complaint. (Doc. 45).

In making that argument, Health Carousel faces an uphill battle. That is

because a court can only strike class allegations where, “from the face of the …

complaint[,] ... it will be impossible to certify the class as alleged, regardless of the

facts plaintiffs may be able to prove.” Fishon v. Mars Petcare US, Inc., 501 F. Supp.

3d 555, 575 (M.D. Tenn. 2020) (quoting Schilling v. Kenton County, No. 10-cv-143,

2011 WL 293759, at *4 (E.D. Ky. Jan. 27, 2011)). Without that showing, a court

should deny the motion and allow discovery to proceed. See id. (quoting In re Am.

Med. Sys., 75 F.3d 1069, 1086 (6th Cir. 1996)).

To begin, Health Carousel has failed to even discuss why Plaintiffs’ RICO and

OCPA claims and Carmen’s FLSA claim should not proceed with class allegations. At

most, Health Carousel claims Plaintiffs’ RICO claims are “dubious.” (Id. at #1135).

Without an affirmative showing from Health Carousel, the Court declines to hold that

it would be impossible for Plaintiffs’ RICO, OCPA, and FLSA claims to be certified in

a class action.

As to the TVPA claims, Health Carousel argues that common issues will not

predominate over individual issues and that a class action is not a superior method

of adjudicating the claims. (See Doc. 45). Let’s start with predominance. Under

Federal Rule of Civil Procedure 23(b)(3), before certifying a class, the district court

must find that common issues of law or fact “predominate over any questions affecting

only individual members.” Predominance “tests whether proposed classes are

sufficiently cohesive to warrant adjudication by representation.” Amchem Prods., Inc.

v. Windsor, 521 U.S. 591, 623 (1997). “To meet the predominance requirement, a

plaintiff must establish that issues subject to generalized proof and applicable to the

class as a whole predominate over those issues that are subject to only individualized

proof.” Young v. Nationwide Mut. Ins., 693 F.3d 532, 544 (6th Cir. 2012) (quoting

Randleman v. Fid. Nat. Title Ins., 646 F.3d 347, 352–53 (6th Cir. 2011)).

But “[a] plaintiff class need not prove that each element of a claim can be

established by classwide proof.” In re Whirlpool Corp. Front-Loading Washer Prods.

Liab. Litig., 722 F.3d 838, 858 (citing Amgen, Inc. v. Connecticut Ret. Plans & Tr.

Fund, 568 U.S. 455, 468). Indeed, “[a] class may be certified based on a predominant

common issue even though other important matters will have to be tried separately,

such as damages or some affirmative defenses peculiar to some individual class

members.” Hicks v. State Farm Fire & Cas. Co., 965 F.3d 452, 460 (6th Cir. 2020)

(citation and internal quotation marks omitted).

The Court finds it at least possible that common issues will predominate. To

start, multiple issues seem to lend themselves to common resolution. For example,

the putative class members claim to have entered largely uniform contracts with

Health Carousel. (Doc. 43, #990). Plaintiffs allege these contracts created uniform

compulsion from the liquidated damages clauses, isolation, and fear of deportation—

resulting in a supposedly common fear of “serious harm.” (Id. at #1026). And

Plaintiffs allege the putative class members uniformly experienced forced overtime.

(Id. at #995). These allegations provide a relevant foundation for a common resolution

of the TVPA claims.

True, Health Carousel is correct that some differences exist within the class.

Carmen, Amistoso, and Flores each left Health Carousel on different terms, and only

Carmen paid liquidated damages. (Id. at #1011–16). Each worked different roles in

different conditions, with Carmen and Flores at a single site and Amistoso traveling

between patients. (See id. at #1009). But the Court cannot say at this stage that these

differences necessarily predominate over any common issues. While discovery may

change that, the Court maintains its view that it is at least possible that Plaintiffs

will be able to make the necessary predominance showing.

Health Carousel also says a class action is not a superior method of

adjudicating the Plaintiffs’ claims. (Doc. 45, #1139). There, Health Carousel argues,

“[e]ach putative class member has a compelling incentive to pursue individual claims”

and “[t]hese allegedly high-value and individualized claims are best left to each

individual.” (Id. at #1139–40).

Health Carousel may be on to something. The superiority analysis “aims to

‘achieve economies of time, effort, and expense, and promote ... uniformity of decision

as to persons similarly situated, without sacrificing procedural fairness or bringing

about other undesirable results.’” Martin v. Behr Dayton Thermal Prods. LLC, 896

F.3d 405, 415 (6th Cir. 2018) (quoting Amchem, 521 U.S. at 615). “Use of the class

method is warranted particularly because class members are not likely to file

individual actions—the cost of litigation would dwarf any potential recovery.” In re

Whirlpool, 722 F.3d at 861. Potentially small individual recoveries to class members

support the use of class treatment. See Beattie v. CenturyTel, Inc., 511 F.3d 554, 567

(6th Cir. 2007).

But again, the Court cannot say, based solely on the pleadings and as a matter

of law, that a class action is not superior to individual actions. For example, as

immigrants, the class members are likely unfamiliar with the American legal system.

See, e.g., Paguirigan v. Prompt Nursing Agency Emp. Agency LLC, No. 17-cv-1302,

2018 WL 4347799, at *10 (E.D.N.Y. Sept. 12, 2018). And Plaintiffs specifically allege

Health Carousel currently employs some putative class members and does not permit

them to speak about their contract terms with anyone. (Doc. 43, #986). Some putative

class members may interpret that directive as barring them from seeking legal advice

or bringing their own action to vindicate their rights.

Accordingly, the Court cannot say it would be “impossible to certify the class

as alleged.” And finally, as the Court has denied Health Carousel’s other requested

relief, the Court also denies its Motion to Stay as moot.

CONCLUSION

The Court is not today saying that Plaintiffs will ultimately prevail on their

claims. Nor is the Court saying they won’t. And the Court does not pronounce that

this case is definitely amenable to class treatment, or that it isn’t. Rather, the Court

merely finds that Plaintiffs have alleged enough to render their claims plausible and

open the doors to discovery, including discovery intending to show whether this case

should proceed as a class action. What follows from that is a question for another day.

For the above reasons, the Court DENIES Health Carousel’s Motion to

Dismiss Plaintiffs’ Third Amended Complaint (Doc. 44) and DENIES Health

Carousel’s Motion to Strike Class Allegations (Doc. 45). Finally, the Court DENIES

Health Carousel’s Motion to Stay Discovery (Doc. 47) AS MOOT.

SO ORDERED.

August 9, 2023

DATE DOUGLAS R. COLE

UNITED STATES DISTRICT JUDGE

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